Federal Cases
Ninth Circuit Finds Class Waiver Unenforceable Under California Law
Shroyer v. New Cingular Wireless Services, Inc., No. 06-55964, 2007 WL 2332068 (9th Cir. Aug. 17, 2007)
8/17/2007
The Ninth Circuit Court of Appeals has reversed an order compelling arbitration of a cell phone dispute based on its holding that a class action waiver rendered the arbitration agreement unconscionable and unenforceable under California law. The outcome of this case would have been different if the arbitration agreement had contained an opt-out provision because the unilateral ability to reject an arbitration agreement in an arm’s length transaction precludes a finding of procedural unconscionability.
In Shroyer v. New Cingular Wireless Services, Inc., No. 06-55964, 2007 WL 2332068 (9th Cir. Aug. 17, 2007), Shroyer entered into a wireless service contract with Cingular after its merger with AT&T. Approximately a year later, Shroyer filed a class action lawsuit against Cingular, alleging several statutory and common law causes of action premised on alleged rate hikes and service deficiencies... Full Story
Notice of Change in Employment Terms Must Be “Unequivocal” Under Texas Law
Moran v. Ceiling Fans Direct, Inc., No. 06-20810, 2007 WL 2597613 (5th Cir. Sept. 6, 2007)
9/6/2007
Under Texas law, notice of a change in the terms of employment must be “unequivocal” to be effective, both in its nature and its certainty, according to the Fifth Circuit Court of Appeals. Accordingly, a Texas employer could not enforce an arbitration agreement where the employees were not given “unequivocal” notice of the change in terms.
In Moran v. Ceiling Fans Direct, Inc., No. 06-20810, 2007 WL 2597613 (5th Cir. Sept. 6, 2007), Moran and other employees of Ceiling Fans Direct (CFD) were presented with a new dispute resolution policy, requiring binding arbitration of employment claims. CFD presented the policy without reading it, explaining it, or mentioning that continued employment equaled consent to the new policy. Later, CFD did issue an employee handbook containing the new policy, but did not require the employees to sign the handbook... Full Story
Arbitrator Has Authority to Consider Equitable Claims, but Authority Doesn’t Extend to Permanent Injunction Entered Against Uninvolved Non-signatories
Comedy Club, Inc. v. Improv West Associates, Nos. 05-55739, 05-56100, 2007 WL 2556702 (9th Cir. Sept. 07, 2007)
9/7/2007
The Ninth Circuit held that an arbitrator had broad authority to arbitrate equitable claims, but further held that the arbitrator exceeded the scope of his authority by ordering a permanent injunction against non-signatories to the contract who were not directly involved with the signatory parties.
In Comedy Club, Inc. v. Improv West Associates, Nos. 05-55739, 05-56100, 2007 WL 2556702 (9th Cir. Sept. 07, 2007), CCI and Improv West had a licensing contract granting CCI exclusive nationwide trademark rights. After CCI breached the agreement, it filed for declaratory judgment to protect its rights... Full Story
Disputing the Proper Venue for Arbitration Does Not Constitute a “Refusal to Arbitrate” under the FAA
Carrington Capital Management, LLC v. Spring Investment Services, Inc., Civ. No. 3:06CV1665(WWE), 2007 WL 2684728 (D. Conn. Aug. 2, 2007)
8/2/2007
According to a federal district court in Connecticut, disputing a particular arbitration venue does not constitute a “refusal to arbitrate” that triggers a court’s jurisdiction under the Federal Arbitration Act (FAA) to compel arbitration and determine the proper venue, especially when controlling arbitration rules empower the arbitration administrator to determine the proper venue.
In Carrington Capital Management, LLC v. Spring Investment Services, Inc., Civ. No. 3:06CV1665(WWE), 2007 WL 2684728 (D. Conn. Aug. 2, 2007) Carrington and Spring entered into an agreement in which Spring was to exclusively sell and promote Carrington’s funds. The agreement contained an arbitration clause requiring the mediation and arbitration of disputes under the agreement. Carrington accused Spring of violating the agreement by withholding payments after the relationship was terminated, and filed a demand for mediation... Full Story
Arbitrator has “Exclusive Authority” to Decide Arbitrability Where the Arbitration Agreement Reserves Validity Questions for the Arbitrator
Taylor v. Rent-A-Center, No. 2301149, 2007 WL 2301149 (N.D. Ohio. Aug. 8, 2007)
8/8/2007
In granting a motion to compel arbitration, an Ohio federal court held that the arbitrator has “exclusive authority” to determine whether a dispute is arbitrable where the arbitration provision specifies that claims surrounding the agreement’s validity are subject to arbitration.
In Taylor v. Rent-A-Center, No. 2301149, 2007 WL 2301149 (N.D. Ohio. Aug. 8, 2007), former Rent-A-Center (RAC) employee Taylor sued RAC for employment discrimination. RAC moved to compel arbitration pursuant to the employment agreement’s arbitration provision. Taylor opposed the motion arguing that the agreement’s cost-splitting and discovery provisions were unconscionable... Full Story
Seeking a Determination of Arbitrability from an Arbitrator Is Not a Refusal to Arbitrate
Warren Steel Holdings, LLC v. Williams, Civ. No. 3:06CV1665(WWE), 2007 WL 2688240, (N.D. Ohio Sept. 11, 2007)
9/11/2007
A party seeking a determination of arbitrability from the arbitrator is not refusing to arbitrate as defined by the FAA, according to a federal district court in Ohio.
In Warren Steel Holdings, LLC v. Williams, Civ. No. 3:06CV1665(WWE), 2007 WL 2688240, (N.D. Ohio Sept. 11, 2007), Williams filed a breach of contract lawsuit against Warren, and Warren moved to compel arbitration. The parties, at that point, agreed to submit the claim to international arbitration as stated in the contract... Full Story
Courts Not Empowered to Compel Mediation, Only Arbitration, Under FAA
Oklahoma City Water Utilities Trust v. Systems & Software, Inc., No. CIV-07-259-F, 2007 WL 2729369 (W.D. Okla. Sept. 19, 2007)
9/19/2007
Courts are not empowered to compel mediation of disputes in accordance with a contract in the same way that courts are empowered to compel arbitration under the Federal Arbitration Act (FAA), according to a federal district court in Oklahoma.
In Oklahoma City Water Utilities Trust v. Systems & Software, Inc., No. CIV-07-259-F, 2007 WL 2729369 (W.D. Okla. Sept. 19, 2007), Oklahoma City Water Utilities (OCWU) entered into a contract with Systems & Software (S & S) to purchase certain software systems. Later, a dispute arose between the parties, and both filed various court claims against the other. S & S subsequently filed a motion to compel mediation of the claims in accordance with a provision in the contract. OCWU opposed the motion, claiming that the Court had no authority to compel mediation... Full Story
Federal Court Defers to Arbitration Panels on Consolidation Question
Argonaut Ins. Co. v. Century Indem. Co., No. 05-5355, 2007 WL 2668889 (E.D. Pa Sep. 6, 2007)
9/6/2007
Declining to decide which of four partially convened arbitration panels should hear various related reinsurance claims; a federal court held that it lacked authority to choose an arbitral forum, as this would amount to an unwarranted intrusion on arbitral proceedings.
In Argonaut Ins. Co. v. Century Indem. Co., No. 05-5355, 2007 WL 2668889 (E.D. Pa Sep. 6, 2007), Argonaut and Century entered into a reinsurance agreement, which contained an arbitration provision. Several disputes regarding claim payments arose between the parties... Full Story
Court Denies Certification of National Class Based on Need for State-by-State Inquiry into Enforceability of Class Waiver
Lozano v. AT&T Wireless Services, Inc., No. 05-56466, 2007 WL 2728758 (9th Cir. Sept. 20, 2007)
9/20/2007
The Ninth Circuit Court of Appeals has affirmed an order denying certification of a national class because the need for a state-by-state inquiry into the enforceability of the arbitration agreement and class waiver meant that individual questions would predominate over class-wide questions.
In Lozano v. AT&T Wireless Services, Inc., No. 05-56466, 2007 WL 2728758 (9th Cir. Sept. 20, 2007), Lozano filed a class action lawsuit against AT&T, his wireless service provider, alleging that AT&T engaged in “out-of-cycle billing” in violation of the Federal Communications Act (FCA), the California Consumer Legal Remedies Act (CCLRA), and the California Unfair Competition Law (UCL)... Full Story
State Cases
Lack of Mutuality Renders Employee’s Arbitration Agreement Unenforceable
Louie v. Superior Court, No. B196537, 2007 WL 2318968 (Cal. Ct. App. Aug. 15, 2007)
8/15/2007
In reversing an order compelling arbitration of an employment, the California Court of Appeal held that an employee’s arbitration agreement was unconscionable because it lacked mutuality and the employee had no choice but to accept the agreement or lose her job.
In Louie v. Superior Court, No. B196537, 2007 WL 2318968 (Cal. Ct. App. Aug. 15, 2007), PPG implemented Resolve, a new dispute resolution program that required non-union employees to submit any employment related claims to arbitration. Louie, a PPG employee, sued for employment related violations of the California Fair Housing and Employment Act (FHEA). PPG moved to compel arbitration pursuant to Resolve’s arbitration provision. Louie opposed the motion by asserting the agreement was unconscionable. The trial court compelled arbitration and Louie appealed... Full Story
Louisiana Appellate Court Enforces Statutory Mandate That Courts “Shall Confirm” Absent Specific Grounds to Vacate or Modify an Arbitration Award
CACV of Colorado, LLC v. Coston, No. 2006 CA 1460, 2007 WL 2713391, (La. Ct. App. Sept. 19, 2007)
9/19/2007
Trial courts “shall confirm” arbitration awards unless there are statutory grounds for vacatur or modification, and cannot set aside an award merely because the “situation did not seem fair,” according to the Louisiana Court of Appeal.
In CACV of Colorado, LLC v. Coston, No. 2006 CA 1460, 2007 WL 2713391, (La. Ct. App. Sept. 19, 2007), Coston acquired a bank loan to buy a computer and later defaulted on the loan. CACV purchased the debt and sought to collect from Coston through arbitration. Coston did not respond to the various notices and requests regarding the arbitration, and the arbitrator rendered an award for CACV... Full Story
Arbitration Panel Did Not Exceed Powers in Awarding Attorney Fees
Banc of America Investment Services, Inc. v. Lancaster, No. 2-06-314-CV, 2007 WL 2460277 (Tex. App. Aug. 31, 2007)
8/31/2007
Since the Federal Arbitration Act (FAA) neither provides for nor prohibits the awarding of attorney’s fees, an arbitration panel did not exceed its powers in awarding costs and attorney’s fees to an investment institution, according to the Texas Court of Appeals.
In Banc of America Investment Services, Inc. v. Lancaster, No. 2-06-314-CV, 2007 WL 2460277 (Tex. App. Aug. 31, 2007), Lancaster invested in securities through Banc of America. As a customer, Lancaster signed three account agreements containing mandatory arbitration provisions... Full Story
Unconscionability Challenge to Arbitration Appellate Procedures Must Be Made Before Participation in Proceedings
In re Hospitality Employment Group, LLC, No. 05-07-01027-CV, 2007 WL 2757797 (Tex. App. Sept. 24, 2007)
9/24/2007
A party seeking to challenge an arbitration agreement’s appellate procedures as unconscionable must do so prior to fully participating in the arbitration proceedings, and cannot do so once an award has been rendered, according to the Texas Court of Appeals.
In In re Hospitality Employment Group, LLC, No. 05-07-01027-CV, 2007 WL 2757797 (Tex. App. Sept. 24, 2007), Moreno filed suit against Hospitality Employment Group (HEG) for an alleged on-the-job injury. HEG filed and was granted a motion to compel arbitration of the claim in accordance with an arbitration agreement within Moreno’s employment benefit plan. The arbitrator later issued an award for Moreno in the amount of $600,000... Full Story
Court Finds Scope of Lender’s Arbitration Agreement Was Narrowed by Limiting Language
Smith v. Coldwell Banker Real Estate Corp., No. 4:05cv166, 2007 WL 2725826 (D. Miss. Sept. 14, 2007)
9/14/2007
In a case where a bank used two different arbitration agreements for a group of account holders, a Mississippi federal court ruled that the broadly worded arbitration agreement applied to a mortgage dispute but found that the mortgage dispute was outside of the other arbitration agreement because its scope was limited to disputes “concerning the depository account.”
In Smith v. Coldwell Banker Real Estate Corp., No. 4:05cv166, 2007 WL 2725826 (D. Miss. Sept. 14, 2007), eleven plaintiffs opened bank accounts with State Bank and Trust as part of the process for obtaining a home mortgage. Incidental to opening an account at State Bank was signing a stand-alone arbitration agreement... Full Story
ADR Legislation & Regulation
LEGISLATION
OH H 323
SPONSOR: Gibbs [R]
TITLE: Fences Law Revision
INTRODUCED: 09/25/2007
DISPOSITION: Pending
LOCATION: House Rules and Reference Committee
Commentary:
Revises the Fences law. The bill outlines the arbitration procedure beginning with the requirement of a written request for arbitration and notice and ending with emphasizing the finality of the arbitrator's decision. Notably, the arbitrator's written decision must be given to both parties, with one copy to be certified and filed with the applicable county recorder.
PA H 1454
PN: 2507
AUTHOR: Boback [R]
TITLE: Dog Act of 1982
INTRODUCED: 09/26/2007
DISPOSITION: Pending
LOCATION: House Agriculture and Rural Affairs Committee
Commentary:
Amends the Dog Act. An arbitrator shall determine the damage award, which may not exceed $10K per animal. The arbitrator's compensation must be paid by complainant.
REGULATION
California Title 3 CCR Sec(s) 1391, 1391.1
AGENCY: Department of Food and Agriculture
TITLE: Organic Certification Appeal Process
PROPOSED: 04/27/2007
ADOPTED: 09/10/2007
Commentary:
Amends rules by adding sections applying to the appeal process for denial, suspension, or revocation of organic certification and the process for mediation of the denial, suspension, or revocation of organic certification. Provides for choosing a mediator and also that the parties must enter into a written agreement regarding fees.
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